Firms Amid Conflict: Performance, Production Inputs, and Market Competition

68 Pages Posted: 1 Feb 2022

See all articles by Davide Del Prete

Davide Del Prete

University of Naples "Parthenope"

Michele Di Maio

Sapienza University of Rome

Aminur Rahman

Independent

Date Written: November 23, 2021

Abstract

We study the effect of conflict on firms’ economic performance and explore the underlying mechanisms. Combining an original retrospective panel dataset of Libyan firms with geolocalized data on conflict events, we build a firm-specific measure of conflict exposure and use its within-firm variation to show that the relationship between conflict exposure and performance is convex. This is the result of two opposite mechanisms. Revenues decrease because of the conflict-induced lower availability of production inputs. At the same time, revenues tend to increase for surviving firms that face weaker market competition because of the conflict-induced reduction in the number of competitors.

Keywords: Firms, conflict, market competition, foreign workers, imported inputs, Libya

JEL Classification: C23, D22, D74, L20, O12

Suggested Citation

Del Prete, Davide and Di Maio, Michele and Rahman, Aminur, Firms Amid Conflict: Performance, Production Inputs, and Market Competition (November 23, 2021). Available at SSRN: https://ssrn.com/abstract=3969949 or http://dx.doi.org/10.2139/ssrn.3969949

Davide Del Prete (Contact Author)

University of Naples "Parthenope" ( email )

Via generale parisi
Naples, Naples 80133
Italy

Michele Di Maio

Sapienza University of Rome ( email )

via del Castro Laurenziano 9
Rome
Italy

HOME PAGE: http://https://sites.google.com/a/uniroma1.it/micheledimaio/home

Aminur Rahman

Independent

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